Can Malaysian Airlines survive Flight MH370?

At 5:40 AM on Saturday, 8 March 2014, Malaysia Airlines Flight MH370 from Kuala Lumpur to Beijing disappeared from Malaysian radar with 239 passengers and 12 crew on board. At first it was believed to have crashed in the southern Gulf of Thailand, between Malaysia and Vietnam, but as weeks went by without any sighting of debris or survivors, focus gradually shifted to satellite monitoring data from the UK which suggested the plane had crashed into the southern Indian Ocean off Western Australia, thousands of kilometres to the south-west. Today, officials announced a large field of debris (122 objects) had been sighted by a French satellite in the southern Indian Ocean. We are hopeful that some closure is imminent for the families of those on board, and indeed for all concerned.

In this post, don’t intend to rehash the facts and myths (I’m sure we’ve all read and heard them). I want to explore the question “Can Malaysian Airlines will survive the loss of Flight MH370?”.

Source : http://goo.gl/WuXlBf

The tragic story of MH370 is still unfolding and I’m conscious that families are still waiting to grieve the loss of loved ones who almost certainly perished on this flight. Travellers and travel bloggers everywhere are extremely troubled by the sequence of events surrounding MH370. As a frequent flyer, I try not to let events like this put me off flying (we were planning one of our first big Asian adventures when 9/11 happened and we were in Asia when the Bali bombings happened), but it’s easy to start thinking about how our family and friends would cope with us going missing in circumstances like this.

I’m also starting to think beyond the immediate consequences of the loss of lives and the grief of families and friends to how it might impact Asian travel in the next year or two.

Major international tragedies always have a ripple effect across the globe. When two hijacked planes crashed into the twin towers of the World Trade Centre in New York in September 2001, Americans just stopped flying overseas. And not just Americans, but Japanese and other nationalities also cancelled travel plans for a decade after this tragic event. Writing for ETN Global Travel Industry News on the 10th anniversary of 9/11, ETN Ambassador David Bierman explored how the ripple effect of 9/11 was still being felt across the global travel industry 10 years after the event.

I am not wanting to directly compare 9/11 and MH370, as they are tragedies on very different scales, but there will almost certainly be some similar consequences. The fact that terrorism was immediately suspected in relation to MH370 is down to the fact the terrorists were forced, by security upgrades following 9/11, to seek “softer” targets. Early reports following the loss of MH370 pointed to lax security at Kuala Lumpur international airport and widespread passport fraud in Thailand.

ABC TV Australia business editor Peter Ryan published a telling analysis of how Malaysian Airlines and indeed the Malaysian Government struggled to manage the pressures of the 24 hour news cycle and social media, which culminated in reports that MA had notified distraught families of the (still unconfirmed) discovery of the crash site by SMS text message – not entirely true, but true enough for international media to run with it as the story of the day.

In the two weeks leading up to that PR disaster, the Malaysian Government’s apparent obsession with secrecy severely compromised search efforts, despite huge multinational resources being deployed. News outlets repeatedly ran lead stories about Malaysia’s apparent to tell the full story about what its air force knew and what cargo the flight was carrying. Indeed, the Malaysian Government demonstrated a startling propensity over the last week to jump to conclusions that were not yet supported by hard evidence to divert attention away from what it appeared to be not willing to talk about.

Many airlines have survived major disasters in the past. Japan Airlines was able to continue despite losing 520 passengers and crew in Euno, Japan, in 1985. American Airlines got through the lost of 273 passengers and crew in Des Plaines, USA, in 1979. Indeed, Pan Am survived the loss of 583 passengers and crew in Teneriffe, Spain, in 1977 and another 270 passengers and crew when Flight 103 was brought down by a terrorist bomb over Lockerbie, Scotland, in 1988.

So why do I have doubts about Malaysian Airlines capacity to survive this tragedy and move on?

Firstly, none of these tragedies happened in the age of the 24 hour news cycle and ubiquitous social media. In fact, there has thankfully not been a major international passenger airline disaster (loss of 50 or more lives) since 2001. How this disaster was managed has put much of the travelling public severely on edge.

Secondly, more than half of the passengers on board MH370 were Chinese nationals. China is one of Malaysian Airlines most important passenger markets. MA flies regularly to around 50 destinations in China and China Youth Tourism Service is already reporting suspension of its commercial relationship with Malaysian Airlines and suspension of all tours and tourism products related to Malaysia. Ctrip has reported a 50% decline in Chinese bookings to Malaysia since this tragedy began to unfold and China’s Evening Mirror News reported a poll in which 90% of respondents said they would not consider travelling to Malaysia in the future. The drop in passenger traffic between China and Malaysia is estimated at between 400,000 and 800,000 passengers per year and the cost to Malaysia’s tourism industry could be over US$1 billion this year alone.

But the ramifications of how this disaster has been handled in Malaysia go well beyond the impact on the China market. MH370 has been one of the top trending hashtags on Twitter for the past three weeks, indicating just how much this disaster has been felt and absorbed globally. Australia’s Herald-Sun newspaper reported yesterday that there are strong indications Australian tourists have already started to turn away from Malaysia as a holiday and travel destination, with an 18% fall in online hotel booking enquiries in March across more than 200 major booking sites.

The real impact of the loss of Malaysian Airlines Flight MH370 is still unfolding. Just as American travellers stopped travelling overseas after 9/11, I predict Chinese travellers will massively reduce their overseas travel this year as a result of MH370, at least in discretionary tourism markets. Given that source were predicting one billion international seats out of China in 2014, this must have a massive impact on global tourist destinations.

For Malaysia, and for Malaysian Airlines in particular, the impact is likely to be far more serious. The loss of confidence and trust in Malaysian Airlines (once rated as the second safest carrier in the world) will be enormous and will spread well beyond China, across all of Asia. Who in their right mind would want to book a seat on Malaysian Airlines while the cause of the MH370 tragedy and the fate of its passengers and crew remain unknown?

I don’t write this out of spite. Malaysian Airlines was one of my preferred carriers for over two decades, until this month. I won’t use them again. It’s not that I don’t trust their planes or their pilots, it’s that I don’t have any faith in the company or the government that backs them to operate in my best interests as a passenger, or even to deal in good faith with my next of kin in the event of a disaster (as remote as that risk may still be).

In fact, I predict that Malaysian Airlines may go out of business within the next year as the true extent of this disaster is driven home in compensation to families, loss of passenger traffic, cancellations, possible exclusion from the China market altogether, etc., all combine to form a perfect economic and social storm.

Tony and Tracy Gilbert are veteran Asian travellers with experience living and travelling in Thailand, Vietnam, Cambodia, China, Malaysia, Singapore, Indonesia and other Asian countries. Tony is a former journalist and editor who writes for many travel websites.

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